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The U.S. decision to abandon efforts to persuade Israel to curb building on Jewish settlements in the occupied West Bank is stoking anger among the Palestinians, who are questioning the Obama administration's ability to broker a peace agreement. Some analysts, however, say Washington's action may help jump-start the peace process.

For the Israelis, Washington's announcement was merely a change of approach. As the Palestinians see it, it is a sign that the peace process has run amuck.

Chief Palestinian spokesman Saeb Erekat accuses the Israelis of manipulating Washington into giving up a demand that the Palestinians see as key.

He says the damage that the Israelis have caused to the peace process is huge. He says the Palestinians still hope that the U.S. administration holds Israel responsible for that failure, and announces recognition of a Palestinian state if Washington wants to be true to its prior commitments to a two-state solution.

The Palestinians threaten to stay away from negotiations unless Israel freezes construction on settlements. They see no point in negotiating while Israelis are - in the words of one negotiator - colonizing the land on which the Palestinians hope to build a future state.

Israel declared a 10-month slowdown on settlement construction last year under U.S. pressure and as an incentive to bring the Palestinians back to negotiations. When the freeze expired in September, Israel refused to extend it, prompting the Palestinians to walk out of talks.

Mark Regev, a spokesman for Prime Minister Benjamin Netanyahu, says the freeze issue has gotten in the way of progress in the negotiations, and he welcomed Washington's decision to drop it.

"The freeze was seen as a mechanism to help bring forward the peace agreement," he said. "Unfortunately, that proved to be dysfunctional. So, now we've got to find another mechanism by which to move forward and achieve a historic peace agreement. We think it's doable."

Akiva Eldar is a senior columnist for the Tel Aviv newspaper, Haaretz. He is optimistic that the process may now move ahead. "It will help to clear the sky and the horizon. We will realize whether it is possible to reach a final settlement," said Eldar.

U.S. mediators had hoped that a freeze would give both sides room to hammer out an agreement on the borders of a future Palestinian state. Eldar says that in the absence of an agreement on a freeze to begin with, there was little hope that the talks would succeed.

"Unfortunately, it was doomed to fail, the negotiations, because of the differences between Israel and the Palestinians as well as with the rest of the international community," he said. "There was no way that we the Israelis and the Palestinians can meet half way because there is no halfway, only if we reach a final settlement. Otherwise, it's better to keep away from the whole issue of settlements."

Mustafa Barghouti, a prominent Palestinian activist who heads an opposition movement in the West Bank, is not as hopeful. He says the Palestinians had depended on President Barack Obama to push harder against Israeli settlements and occupation as he articulated in his speech to the world's Muslims in 2009, when Mr. Obama said it was time for Israel to stop its settlement activity.

"There is a great disappointment here because there were lots of hopes after President Obama made his speech in Cairo," said the activist. "The fact that the United States President, the head of the only superpower in the world is incapable of making Israel come to mind and stop its violation of international law is definitely an alarming sign."

The perception among many Palestinians is that the support they thought they had in the U.S. President is no more, and leaders say they are considering their options, which analysts say may not be many.

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